Economic growth and deficit reduction have been two of my core principles since being elected to office. I believe the best way to reduce our deficit is by growing our economy and subsequently our tax base, while simultaneously reducing the need for certain government programs.
For the fourth quarter of 2012 the U.S. economy (GDP) actually shrank by .1 percent, the first time our economic growth has been negative since 2009. For 2013, most estimate GDP growth of only 1.9 percent and economists suggest that the GDP needs to grow by about 2.5 percent just to keep the unemployment rate stable and by 4 percent to create enough jobs to substantially reduce the unemployment rate.
There is no question that American’s young, old, rich, or poor are feeling the strain of the recent economic downturn. Unemployment rates are still unacceptably high as uncertainty from Washington has resulted in many employers either reducing their workforce or pulling capital out of the marketplace.
The current response in Washington has been disheartening…more regulations, higher taxes, an unwillingness to cut spending and a mentality that seems to punish American businesses large and small. Instead of providing the incentives and benefits for small business, which create 7 out of 10 new jobs, we are instead increasing taxes on the very entities that will help lead this country out of our current turmoil. Since taking office, President Barack Obama has signed into law numerous new tax hikes or regulatory burdens, the President’s Health Care Law alone includes twenty one new taxes, many aimed at the middle class. In order to achieve long-term sustained growth you need to have an economy that incentivizes risk-taking, savings and entrepreneurship, not one which punishes it.
It is no secret that our country’s massive debt is hurting the economic environment. When the President took office the federal debt stood at an astonishing $10 trillion. Under President Obama, our federal debt has exploded even further, growing by 60% to now over $16 trillion.
Fearful of new proposals to increase their taxes to combat the debt, businesses are sitting on capital rather than reinvesting in their own businesses. The President’s economic advisors have indicated that adding just 1 percent to our GDP can create upwards of 1 million jobs, and it’s precisely this 1 percent drag on our GDP that experts believe the size of our debt is causing. Currently our debt is over 100 percent of yearly GDP, an unsustainable level not too far off from some of our European friends who have been plagued by turmoil and economic collapse.
Our solution can’t simply be to increase the corporate and marginal tax rates for individuals. I’ve seen that attempted in Illinois, it’s a recipe for business and then individuals to relocate elsewhere, shrinks the taxable base and results in a prescription for ever increasing taxes.
First and foremost we must get our spending under control, to that effect I have supported yearly Republican budgets which cut spending by over $5 trillion over the next decade and eliminated over $2.5 trillion in tax increases called for in Obamacare and the President’s proposed budget. I also supported the Cut, Cap and Balance Act and the Budget Control Act to cut government spending by $2.4 trillion over the next 10 years and required a vote in Congress on a balanced budget amendment to the constitution, something which I vehemently support. This is in stark contrast to the Democrat controlled Senate which as of January 2013 had not passed a budget in close to 4 years. I recently supported the No Budget, No Pay Act which makes any future adjustments to the debt ceiling contingent on the Senate actually passing a budget to show how they will deal with our crushing debt levels or forfeit their congressional pay for that year.
I will continue to be a leader in taking on efforts to reduce our unsustainable debt and believe it is equally important Congress lead by example. This is why I supported legislation reducing Congress’s budget by 5% for FY11 and by another 6.4% percent in FY12. Additionally, I supported legislation to prevent the implementation of the President’s recently proposed executive order to give pay increases ranging of .5% to 1% to federal employees including Members of Congress. It is unconscionable to think that the President would go around the intent of Congress and propose pay increases through executive order for federal employees including the Vice President and Members of Congress when our current debt is over $16 trillion and millions of Americans are struggling to make ends meet and find employment.
We also must tackle the mandatory side of our spending; this includes reforming entitlements to save them and our country from fiscal ruin and preserving them for those who really need them. By 2045 the amount our Federal government is obligated to pay in mandatory spending will equal the entire revenue of the Federal budget. This means we will literally only have enough money to pay for Social Security, Medicare and Medicaid with nothing left for other programs like Defense, Transportation, Education, etc. The Budget I supported this year would have strengthened programs like Medicare, doing nothing to affect current or imminent retirees, so that Americans of all ages could count on this important safety net program being there for them when they retire. Most importantly, this budget would have reached primary balance (revenues = expenditures) by 2015.
The truth is we can take small steps now to help shore up Social Security and Medicare. However, to get anything done it will take engaged leadership by the president and both Republicans and Democrats. There is no disputing both parties have different solutions on how to address mandatory spending, but there is some middle ground and that’s where we should start. For example, both sides are committed to the notion that there will be no changes in benefits for current retirees or those who will retire in the next ten years. I serve on the Ways and Means subcommittee on Social Security and expect to play a role as these discussions continue, because the bottom line is at the rate we are going if we don’t do anything there will be nothing left to discuss because these programs will be insolvent for future generations.
The synergy of economic interests in the 18th District is profound. Both the union higher wage manufacturing jobs and agriculture (which is the largest industry in the 18th District) export over half of their products and commodities, with some categories being 70% exported.
I worked hard with my colleagues on the Ways and Means Committee subcommittee on Trade to pass job creating Free Trade Agreements with Colombia, Panama and South Korea. Passing these free trade agreements, which did not require a tax increase, add to our national deficit, or hurt our small businesses, enables businesses to create well paying American jobs in sectors of our economy such as manufacturing and agriculture. President Obama himself has stated that increasing U.S. exports by just one percent would create over 250,000 American jobs. According to the International Trade Commission, passage of the Colombia, Panama, and South Korea free trade agreements increases our exports by more than one percent.
As a member of the Ways and Means Subcommittee on Trade, I participated in several hearings on the three trade agreements over the course of the year. I was able to question U.S. Trade Ambassador Ron Kirk about removing any remaining obstacles to submitting these agreements to Congress.
With our unemployment rate still unacceptably high, lowering trade barriers will help U.S. and Illinois businesses create new jobs at a time when Americans need them the most – without spending more taxpayer money.
I have also been a strong proponent of advancing a highway bill in Congress to put people back to work now and in the future. The deficiencies in our infrastructure network increase transportation costs, which in turn drive up the cost of every product we buy and make American products less attractive on the world market. Global employers considering a presence in the United States will require a modern transportation infrastructure that enables them to move their finished products to the global market place in a timely and cost-efficient manner. Our aging and congested system is a strong disincentive for firms to expand their presence in the United States and create jobs here at home. A long-term transportation authorization will help make America more competitive in the global marketplace and create jobs in all sectors of our economy.
In 2012 I supported the longest highway reauthorization signed into law since the expiration of the last highway bill in 2009. A reauthorization where Illinois will average $1.38 billion a year in federal highway funding from the Highway Trust Fund and where Illinois’ percentage of the total highway trust fund allotment increased from 3.52% to 3.67%. Additionally, Republicans secured a bill that cuts down the project approval time, going far towards the goal of cutting the project delivery time in half, from 15 months to 7 months. The reauthorization also consolidated 2/3rds of the highway programs in order to ensure more money was going towards actual road construction and less towards bureaucratic overhead. This bill was a good start, but new legislation will soon be needed to once again extend our highway programs and ensure infrastructure construction continues to take place.
We must also look to reform our job destroying tax code. Simply put, the tax code is too costly, too complex and is costing jobs. This is one of the reasons I fought to get on the House Ways and Means Committee, because I believe reforming our tax code will be key to job creation in this country. On Ways & Means I have been a leader in working on comprehensive tax reform to lower taxes for individuals and small business, allowing people to keep and invest more of their own money while attracting businesses to the United States. I remain focused on transforming today’s tax code from one that prevents job creation to one that promotes job creation.
A recent survey of small businesses found that taxes were the largest impediment to investing, expanding and hiring. Additionally, having the highest business tax rate in major OECD nations has resulted in employers looking to locate abroad rather than hire here at home. If the U.S. wants to be competitive once again, its starts with reforming our tax code. I will continue my work to draft a proposal to bring down our employer tax rate, while ensuring it doesn’t add to our deficit by simultaneously getting rid of the 70,000 pages of special interest deductions, loopholes, credits, and exemptions which are benefiting few, but costing all in the form of a higher tax burden. Reforming our tax code will lead to the creation of close to 1 million jobs in the first year alone.
From there we must look to repeal onerous business regulations enacted by this Administration which are hurting our country’s job creators. Excessive government regulations only serve to stifle growth. For that reason, I support policies that will help remove these regulations and allow small businesses to thrive. One such measure is the Small Business Paperwork Elimination Act which I helped move out of the Ways and Means Committee to the House floor in 2011, and it has since been signed into law. This legislation repealed the onerous 1099 reporting requirement, which would have required a separate 1099 tax form for basic business expenses, including phone and internet service, shipping costs, and office supplies.
Last year I also authored legislation, H.R. 3877, the 1099K Overreach Protection Act, along with fellow Illinois Representative Bobby Shilling as well as Senators Thune and Cantwell, which prevented the Administration’s latest tax burden on small businesses from going into affect. The 1099K reporting requirement required the IRS to collect a new document known as a 1099K from third party payment entities, such as credit card companies. This document shows all credit transactions conducted at a business in a given year and was meant only to be collected from credit card companies. Unfortunately, the IRS had planned to require businesses to reconcile the 1099K report with their own internal business numbers to calculate gross receipts. Simply put, many small businesses lack the specialized accounting software, time, or personnel to undertake such a reconciliation effort successfully. Additionally, this new requirement increases the accounting workload and costs for small businesses. I was glad that as a result of this legislation the IRS ultimately backed away from this planned burden on small businesses and will not be requiring additional tax calculation on behalf of the small business.
We must reduce Washington regulatory imposed red tape which is stifling business and economic growth. In just 2012, the Federal Register has run 41,662 pages. These regulations that have been published would cost $56.6 billion and result in paperwork that would take 114.1 million hours to complete. On top of this astounding number of new regulations, since 2009, the Obama Administration has proposed over 400 regulations classified as “economically significant, defined as likely to have an annual effect on the economy of $100 million or more.
Additionally, I was glad to co-sponsor the HR 10, the Regulations from the Executive In Need of Scrutiny (REINS) Act. This bill, which passed the House, would require congressional approval for any federal regulation with an economic impact of $100 million or more. Regulations coming out of Washington are out of control, and according to the Small Business Administration, federal regulations cost our economy $1.75 trillion per year. While the Senate has yet to act on this legislation, I am once again a cosponsor in the 113th Congress of the REINS Act.
As we work to reform the culture of spending in Washington, reduce regulatory burdens and reform our tax code, there are also immediate initiatives we can support now which will have an impact on employment. For example, in the 112th Congress I authored and had signed into law legislation to provide incentives for employers to hire unemployed veterans. Additionally, I had signed into law and extension of the Work Opportunity Tax Credit, a vehicle which has been used to hire almost 6 million individuals off of public assistance since the program’s inception. I also had signed into law legislation to continue the tax treatment on biodiesel products, an industry which supports the employment of 23,000 individuals and is a vital market for the soybean farmers of central Illinois.
I will continue to work with my colleagues on both sides of the aisle to advocate for sound fiscal policies that will truly help stimulate growth, promote American businesses and protect American taxpayers from wasteful government spending.